HAMP and other housing programs may be cut from federal budget
The House Financial Services Committee is meeting Thursday to discuss and "markup" its oversight plan for the 112th Congress. On the docket of proposed federal budget cuts are 12 different housing programs, with only one being replaced. Probably the most well known of the programs the committee wants to curtail are the Making Home Affordable Programs established about a year ago. House members on the committee wrote they have been underwhelmed by the $75 billion mammoth known as Home Affordable Modification Program and its counterpart Home Affordable Refinance Program that were intended to assist nine million borrowers at risk of foreclosure. Since HAMP's launch in March 2009, about 579,659 permanent modifications have been completed, according to Treasury data. Also under this segment is a $200 billion commitment to purchase Fannie Mae and Freddie Mac preferred stock. "HAMP’s foreclosure mitigation initiatives have failed to help a sufficient number of distressed homeowners to justify the program’s cost," the plan said. "Accordingly, the Committee recommends rescinding unspent and unobligated balances currently committed to these programs." The Federal Housing Administration Refinance Program is also on the chopping block because of its less than impressive performance in the first two months it was implemented. The $8 billion program, designed to offer underwater borrowers a refinance, received only 35 applications between Sept. 7, 2010 and the end of October that same year, according to the HFSC. The committee is aimed to discontinue NeighborWorks America, a government-charter, nonprofit corporation with a national network of affiliated organizations that focus on community reinvestment activities such as mediation counseling. The program, an allocated cost of $195 million, overlaps the functions of the Department of Housing and Urban Development and "are duplicative of existing HUD programs and can be consolidated," the oversight plan says. Only HOPE IV will be replaced. The program uses funds to convert distressed or dangerous public housing developments into mixed-use housing and costs $200 million annually. The committee is proposing to replace it with Choice Neighborhoods, an existing program that serves the same function and costs $140 million less. Among other programs the committee also wants to abolish are Rural Housing and Economic Development, which currently receives $25 million annually to provide grants to non-profit organizations for capacity home building in rural areas, and the Neighborhood Stabilization Program, which gives federal funds to states and local governments with high concentrations of foreclosed homes, subprime mortgage loans and delinquent home mortgages. Approximately $1 billion was allocated for NSP. See the House Financial Services Committee's entire oversight plan here. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.